Defending a Tax Cut Deal That is Robin Hood in Reverse

The Senate is set to debate the tax cut deal today. A vote on the deal is likely, given the fact that the two senators, which had suggested they would filibuster the deal, either spent eight and a half hours on the Senate floor explaining why it is a "bad deal" or have totally abandoned the idea of holding up business as usual in the Senate to prevent passage of the deal.

President Obama in his recent weekly address defended the deal saying middle class families would "end up paying an extra $3,000" in taxes if Congress doesn't act. He noted how the middle class was hit hardest by the recession and suggested economists have said a "tax hike on working families could actually cost us well over a million jobs." He didn't say what "economists" he is citing so we are expected to take the president at his word.

He lauded the deal saying "a single mom with two kids in Ohio working as a cashier.  With this plan, she'd get a new payroll tax cut and a bigger child tax credit together worth more than $2,300." And he added, "It's going to make a difference for a couple in Florida earning about $50,000 and trying to put one of their two kids through college.  They'd save more than $4,000 because of the middle class tax cuts including a $2,500 tax credit to go toward college tuition."

And, he concluded his address by singling out how "friends" in his own party are "uncomfortable" with parts (if not all) of the agreement. In a statement that has become typical of President Obama's leadership (or lack thereof), he declared, "e cannot allow the middle class in this country to be caught in the political crossfire of Washington.  People want us to find solutions, not score points. And I will not allow middle class families to be treated like pawns on a chessboard."

The individual stories of how this deal may help middle class families sound refreshing. The thought of middle class families not getting unemployment benefits they need or getting tax breaks or credits because of politics as usual is unsettling. But, stories and thoughts of the middle class experiencing more despair are not as unsettling as the aversion to conflict, which President Obama has displayed.

President Obama understands the economic realities. But, for the fact that he will be dialing for the same corporate, rich, and wealthy dollars in his bid for re-election in 2012, it appears he can do nothing but compromise. He could break this deal up into pieces and run them through the House and Senate individually putting Republicans on the defensive; he could make an issue out of political situations where Republicans filibuster things like $250 COLA checks for seniors and disabled veterans. He could go a long way to address income inequality in the country by killing the Bush tax cuts for the wealthy for good. But, President Obama does not; he prefers to create conflict between himself and his base instead of with the very people who are committed to sabotaging his presidency and propping up the wealthy at the expense of the middle class.

President Obama is complicit in the redistribution of wealth from the bottom to the top. The press has given up its responsibility to educate the public fully on economic realities this country faces. That is why Senator Bernie Sanders (I-VT) took to the floor on Friday, December 10, to shift the discourse and conversation on the economy to a debate that was not so ignorant of the reality the poor, working and middle class people in America face.

Sen. Sanders outlined why he was trying to delay passage of the agreement and explained that Americans should say, " Wait a second, it makes no sense to us to be giving huge tax breaks to the richest people in this country--literally millionaires and billionaires--and driving up the national debt so our kids can pay more in taxes in order to pay off that debt." He called this transfer of wealth that President Obama is pushing "Robin Hood in reverse." It would take money from the middle class and working families and funnel it to the wealthiest people in America.

Specifically, the Bush era 15 percent tax rate on capital gains and dividends would continue, which means, as Sen. Sanders said, "people who make their living off of their investments--if you invest, if you earn dividends--will continue to pay a substantially lower tax rate than the average American person in the working class, middle class--our firemen, our teachers, our nurses." The estate tax would be lowered to 35 percent (it was 55 percent under President Clinton). The national debt would be increased by "$1 trillion over a 10-year period."

And, according to the New York Times, "Although the $120 billion payroll tax reduction offers nearly twice the tax savings of the credit it replaces, it will nonetheless lead to higher tax bills for individuals with incomes below $20,000 and families that make less than $40,000. That is because their payroll tax savings are less than the $400 or $800 they will lose from the Making Work Pay credit." Essentially, the wealthy will pay less taxes because of the deal than Americans with the lowest income.

The reality is that middle class Americans are already "pawns on a chessboard." If traditionally they weren't, they are now and have joined poor and working class Americans as people whose livelihoods can be used in bargains to satisfy craven Republicans and the wealthy few in this country who believe they are invaluable to the American economy. The middle class' future is a bargaining chip when it comes to balancing the books and that is because the Obama Administration and Democrats are complicit in perpetuating myths of trickle-down economics and ideas that the wealthy are needed in order to keep the economy robust and healthy.

This deal provides another indication that President Obama no longer intends to change the culture of Washington. The culture has polluted his political soul and turned him into someone who uses Beltway politics as a guide for all action on issues. The culture does not permit him to address the fundamental problems facing the middle class -- stagnant wages, declining median income for families, increasing costs of health care, an education system that increasingly fails to properly educate Americans, etc.

Submitted for the record by Senator Mary Landrieu (D-LA) during Senator Sanders' "filibuster" on December 10th was a report titled, "Income Inequality and the Great Recession." It came from Senator Chuck Schumer and the Joint Economic Committee. 

The report warns:

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